This newsletter includes the following headings: taking stock; and tabular data on major data releases; activity and inflation; trade and finance; financial markets; and commodity prices.
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While precise impact of Brexit on the EU/UK trade and investment agreements with third countries will depend primarily on the terms of the withdrawal agreement to be concluded between them, most scenarios suggest an extensive process of amendment of the text and/or commitments in multilateral and bilateral agreements.
... See More + At the multilateral level, the UK will remain a WTO Member, but will no longer be represented by the EU. The separation of the UK obligations from the current EU lists of concessions and schedules of commitments will require amendments that, particularly regarding subsidies and quotas, may lead to a broader renegotiation process requiring consensus of all interested WTO members. At the bilateral level, the status of current EU PTAs with regard to the UK and its trading partners remains uncertain: Some elements suggest that these PTAs may no longer be valid for the UK, or that, even if legally valid, they will no longer cover the relationship between the UK and the third country. Further, EU agreements focusing on goods only will no longer apply to the UK. For these agreements to continue to apply, the UK and the third country will need to amend some aspects of the text of the agreement as well as of the lists of commitments. Investment treaties concluded by the UK with third countries will remain valid, and no amendment is in principle necessary. Parties could require amendments to the text of the treaty, due to a fundamental change in circumstances. LDCs and developing countries who benefit from the EU GSP will continue under this regime for the remaining EU member, but that GSP framework will no longer be applicable to the UK. The UK may introduce a new GSP regime of its own. In all cases, third countries who consider that Brexit has diminished the value of their negotiated commitments have the opportunity to request compensation in sectoral commitments or changes in the text of the agreements, or ultimately terminate the agreement The process of amending the trade and investment agreements requires comprehensive knowledge of their trade and investment flows with the EU and the UK.
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As the fate of the Trans-Pacific Partnership (TPP) hangs in balance, an evaluation of what it offers could inform current decisions and shape future negotiations.
... See More + The TPPs services component has been hailed as one of the agreement's major accomplishments. To assess the agreement's impact on national policy in the major services sectors, we created a new public database. This database reveals that TPP commitments seldom go beyond countries' applied policies, suggesting the explicit liberalization resulting from the agreement is limited only to a few countries and a few areas. However, the TPP enhances transparency and policy certainty because parties' services commitments cover more trading partners, more sectors and are in some cases closer to applied policies than their commitments under previous agreements. Furthermore, new TPP rules, including on state-owned enterprises, government procurement and competition policy, could enhance services market access. In particular, the TPP breaks new ground in prohibiting restrictions on international data flows, while at the same time creating unprecedented obligations on all parties to protect consumers from fraud and protect privacy. These dual obligations on importing and exporting countries represent a model for regulatory cooperation that could elicit greater market opening if applied to other areas.
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The Republic of Sudan’s seaports used to be known for congestion resulting from the slow processing of imported goods. In response, the government created an ad hoc National Committee on trade facilitation to help streamline the processing of goods coming in and to facilitate trade.
... See More + This smart lesson describes the steps taken in setting up the National Committee on Trade Facilitation and the challenges involved.
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One of the most important instruments of trade facilitation is the commodity nomenclature, which provides a definition of all goods subject to foreign trade.
... See More + The correct classification of goods forms the basis for determining the appropriate value of a good and for determining the customs duties imposed on a good on import or export. Customs statistics on foreign trade are derived from it, and those statistics in turn serve as a tool for the determination and implementation of customs policy. Commodity nomenclature is used not only at the national level, but also by the World Trade Organization, the World Customs Organization, the United Nations, and other international entities. Importers and exporters or investors in other countries visit customs nomenclature websites thousands of times a day to see the types and levels of customs duties and other charges and trade policy measures that particular countries apply. Trade policy regulations, rules of origin, and trade statistics in almost all of the developed and developing countries are designed and compiled on the basis of customs nomenclatures. This SmartLesson discusses how the Central Asia Trade Logistics Project worked with the Customs Administration of the Republic of Tajikistan on the development of its first national commodity nomenclature.
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Stagnant global trade, subdued investment, and heightened policy uncertainty marked another difficult year for the world economy. A moderate recovery is expected for 2017, with receding obstacles to activity in commodity exporters and solid domestic demand in commodity importers.
... See More + Weak investment is weighing on medium-term prospects across many emerging markets and developing economies (EMDEs). Although fiscal stimulus in major economies, if implemented, may boost global growth above expectations, risks to growth forecasts remain tilted to the downside. Important downside risks stem from heightened policy uncertainty in major economies. Downside risks to global growth include increasing policy uncertainty in major advanced economies and some EMDEs, financial market disruptions, and weakening potential growth. However, fiscal stimulus in key major economies, in particular, the United States, could lead to stronger-than-expected activity in the near term and thus represent a substantial upside risk to the outlook. In view of the limited room for macroeconomic policy to absorb further adverse shocks, as well as subdued growth prospects, structural reforms that boost potential growth remain a priority. In EMDEs, investment in human and physical capital would help narrow unmet needs in skills and infrastructure and support growth for the long term. Rebuilding policy space, addressing vulnerabilities, and enhancing international integration by promoting services trade and foreign direct investment would also boost resilience and improve growth prospects.
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In 2008, Morocco’s National Ports Agency launched a project to create a national single-window platform for Morocco’s foreign tr ade. The process was long and difficult, and its success is owing in large part to the leadership and focus demonstrated by PORTNET S.A., the company created in 2012 to be in charge of the project.
... See More + This SmartLesson describes the steps PORTNET took to forge a strategic alliance between public and private stakeholders in Morocco to achieve a common, mutually beneficial aim: streamline Morocco’s foreign trade procedures and improve its business climate.
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This report examines how Nepal could move away from a remittance-driven growth model by reforming its trade policies to increase competitiveness.
... See More + It looks at the extent to which Nepal has been tapping into its trade potentials, the underlying obstacles that it faces, and the type of reforms that could turn trade and investment into a vehicle for growth. Five key messages emerge. First, Nepalese exporters remain small and struggle with increase their shipments once they enter a new market, rather than with the fixed cost associated with entering. This is due to severe supply-side constraints that affect their trade and production costs. Second, Nepalese firms underutilize existing trade agreements and granted trade preferences. Third, diversification opportunities lie in fast-growing economies in East Asia and the Pacific. Efforts regarding connectivity, trade facilitation and export intelligence could help firms get to those markets. Fourth, to reduce the anti-export bias of its trade policy, Nepal needs to simplify its tariff code, reduce tariffs on intermediates, and embrace deeper integration, starting with more openness to services and investment. Fifth, trade reforms in Nepal are welfare enhancing and, on average, pro-poor.
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This program document proposes the second operation in a programmatic series of two Regional Trade Facilitation and Competitiveness Development Policy Credits (RTFCCs) designed to support the efforts of the Burkinabe and Ivorian Governments to reduce trade and transport costs along the Abidjan-Ouagadougou corridor.
... See More + The RTFCC focuses on (a) professionalizing and formalizing the trucking industry; (b) modernizing the organization of the trucking market; (c) enhancing the competitiveness of maritime and inland gateway; (d) improving customs clearance; and (e) facilitating transit.The rationale for these series of two programmatic budget operations was explained in detail in the program document of first operation and is, therefore, only summarized here.The premise is that the reduction of transport costs and delays requires coordinated policy actions by the two countries to optimize the following dimensions: (a) physical flow of goods, whichrequires the establishment of a competitive and efficient market for cargo handling and trucking services, and the improvement of operational efficiency at terminals and (b) documentation and information flows, to simplify and streamline processes for the transit and clearance of goods. Achieving progress in the two dimensions is based on the principle that the promotion of competitive market structures in transports and logistics services will generate efficiency gains along the logistics chain and lead to lower costs and delays for traders. Competition will be enhanced by a fair and transparent legal framework as well as by informed customers through the use of effective information sharing systems both in transports and customs. The RTFCC programmatic series is fully aligned with the World Bank Group’s strategic priorities in Burkina Faso and Côte d'Ivoire.The facilitation of trade and reduction of transport costs in both countries is expected to generate broad welfare gains and thus to contribute to boosting shared prosperity and ending extreme poverty. For Burkina Faso, the proposed operationcontributes to the objectives of the current Country Partnership Strategy for the period FY13–FY16, the objectives of which include: (a) accelerating inclusive and sustainable economic growth; (b) enhancing governance for more efficient social services delivery; and (c) reducing social, economic, and environmental vulnerabilities. A recent Performance and Learning Review of the Country Partnership Strategy recommended an increased focus on improving the business environment through the strengthening of the institutional framework for market competition, notably in the transport sector. For Côte d’Ivoire, the proposed operation is equally aligned with the new Country Partnership Framework for the period FY16–FY19 (Report number 96515), notably with its focus areas dedicated to accelerating sustainable private sector-led growth and cross-cutting themes of governance and spatial inequality.These projects aim at supporting the two Governments in two main ways: (a) providing technical and financial assistance to enable the effective implementation over the medium term of key but challenging transport and customs-related reforms identified in the Policy Matrix of the RTFCC DPO; and (b) establishing support mechanisms to help private operators adapt to the new regulatory environment and mitigate the potential negative socioeconomics impact of these reforms.
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Some of the headings included in this issue of the Development Economics Prospects Group (DECPG) weekly global economic newsletters are as follows: taking stock; weekly insight: market forces and OPEC’s ability to control prices; major data releases; activity and inflation; financial markets; and commodity prices.
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Special economic zones, one of the most important instruments of industrial policy in developing countries, often feature export share requirements.
... See More + That is, firms located in these zones are obliged to export more than a certain stated share of their output to enjoy the wide array of incentives available there, a practice prohibited by the World Trade Organization. This paper exploits the staggered removal of export requirements across products and over time in the special economic zones of the Dominican Republic to evaluate whether the importance of exports originating from the zones was affected by the elimination of export requirements. The findings show that entry increased among firms in special economic zones, while the average value of export transactions fell for existing exporters following the reforms. At the same time, continuous exporters were unaffected by the policy change, possibly because these firms were not constrained by the export requirement. Overall, special economic zones became more important with respect to the number of exporters based there but not in terms of the value of exports. The findings suggest that the elimination of performance requirements made it more attractive for firms to be based in special economic zones.
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Some of the headings included in this issue of the Development Economics Prospects Group (DECPG) weekly global economic newsletters are as follows: taking stock; weekly insight: how near is current credit-to-GDP ratios in EMDEs to thresholds identified as early warning indicators?
... See More + Major data releases; activity and inflation; financial markets; and commodity prices.
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This paper describes the trade performance of Bangladesh at the macro and micro levels for goods and services. The analysis of the basic orientation of trade is crucial to judge the extent to which a country’s trade structure is conducive to future growth.
... See More + The analysis of trade performance at the aggregate and sector levels is complemented by a micro analysis based on detailed firm-level data from customs, in the trade outcomes analysis. The analysis uses the decomposition of the margins of trade growth as a framework for exploring trade competitiveness and analyzes the level, growth, and market share performance of existing exports (the intensive margin), as well as the market share performance of new exports. The analysis highlights the following: (a) the heavy sector and market concentration of exports; (b) the potential to improve trade performance by penetrating new markets and exporting new products, as the low entry and exit rates of firms suggests competitiveness challenges likely driven by weaknesses in the general export environment; and (c) untapped potential in services exports despite a noticeable increase in services exports, driven by the growth in communications services and other business services (including engineering, consulting, and other professional services), which reflects Bangladesh’s large pool of labor and growing opportunities in emerging services, such as skill-intensive and professional services. Overall, the analysis suggests that there is potential to intensify exports based on the existing factor endowment (a large pool of unskilled labor); that is, existing exports can grow significantly in current and new markets. The data suggest that Bangladesh will have to work harder to produce another large, labor-intensive cluster like garments, but its export presence in a wide variety of manufactured products indicates that it is possible, with the right supporting environment and with skill upgrading.
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This new issue of the International Center for the Settlement of Investment Disputes (ICSID) caseload statistics provides an updated profile of the ICSID caseload, historically and for the centre's fiscal year 2016.
... See More + It is based on cases registered or administered by ICSID. This document illustrates: the number of cases registered under the ICSID Convention and Additional Facility Rules; the number of other cases administered by the ICSID Secretariat; the basis of consent to ICSID jurisdiction invoked in registered arbitration and conciliation cases; the geographic distribution of ICSID cases by the State party to the dispute, and the economic sectors involved in ICSID disputes. It also contains data on outcomes in ICSID arbitration and conciliation proceedings, including further information on disputes decided by arbitral tribunals, data on discontinued ICSID arbitration proceedings, and outcomes to date in annulment proceedings under the ICSID Convention. The nationalities and geographic origins of arbitrators, conciliators and ad hoc committee members appointed in ICSID cases are also featured.
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The rise of global value chains (GVCs) is one of the most important transformation in global trade and investment occurred in the last decades.
... See More + Once concentrated among a few large economies, global flows of goods, services, and capital now reach an ever larger number of economies worldwide. Falling transport costs due to important innovations such as containerization, lower trade costs achieved both through a general reduction in tariffs worldwide and by the proliferation of trade and investment agreements, the Information and Communication Technologies (ICT) revolution, and trends in global business to outsource, non-core business functions paired with a drive towards cutting costs on goods produced for export, have led to, second unbundling of globalization in the 1990s and 2000s (Baldwin and Lopez-Gonzalez 2015). Nepal’s National Trade Integration Strategy 2015 (NTIS 2015) was developed with the objective of enhancing the contribution of the trade sector to growth and to overcome the constraints and challenges associated with trade development and export promotion. This note explores some stylized facts about Nepal’s integration in GVCs and identifies policy recommendations in cross-cutting areas that relate to most of the export sectors prioritized by the NTIS 2015. These recommendations are not meant to be specific to individual value chains or products and are based on the challenges identified through data analysis and interviews with firms in key export sectors and based on good practices observed elsewhere. The report is structured in three sections beside the introduction. The second section presents five stylized facts about Nepal’s exports that are related to GVC participation. The third section proposes some policy recommendations to address the issues highlighted in the analysis. The last section concludes.
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The impact of opening to trade on economic institutions is likely to be multifaceted and depend crucially on country-specific circumstances. In the past decade an active body of research has studied this relationship.
... See More + This framework makes is especially clear why international trade opening has the potential to transform institutions. What is needed to effect institutional change is a large and discrete change in the distribution of economic resources in society. These papers draw attention to the distribution of political power as the determinant of how institutions react to trade opening. If “rent seekers” are in power when trade opening occurs, international trade often enables them to increase their rent-seeking behavior and institutions deteriorate. If productive agents are in power, the opposite occurs. Thus, these models point to the possibility of a divergence in institutions as countries open to trade.
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